1

The Bank of East Asia, Limited

Financing The DealsHow Can Foreign Invested Enterprises Obtain Bank Financing in China?

Presented by :The Bank of East, LimitedNovember 2002

2

� Co-operative Joint Ventures

� Equity Joint Ventures

� Wholly Foreign-owned Enterprises

Foreign Invested Enterprises Include :

3

Minimum Registered Capital Required:

For Total Investment Amount

Minimum Registered Capital Required

Below US$3 million (inclusive) 70% of the total investment

Between US$3 million and US$10 million (inclusive)

50% of the total investment, with a minimum of US$2.1 million

Between US$10 million and US$30 million

40% of the total investment, with a minimum of US$5 million

US$30 million (inclusive) or above

33.3% of the total investment, with a minimum of US$12 million

4

Maximum Amount Of Foreign Currencies That A Foreign Invested Enterprise Can Borrow

g Total Investment- Registered Capital

$ $ $

g Can be Financed by Shareholders’ Loans and/or Other Financing Channels

g No such restriction on RMB financing

5

� Shareholders’ Loan Agreement

� Tenor (With Prepayment Clause)

� Interests Charged

� Registered With State Administration of Foreign Exchange (“SAFE”)

Shareholders’ Loans

6

� Bank Loans

� Trade Finance Facilities

� Leasing / Hire Purchase

� Receivable Financing / Factoring

� Bank Guarantees / Standby L/C’s

� Venture Capital Funds

Financing Channels

7

Factors To Be Considered

•Guangdong Province

•Guangxi Province

•Hunan Province

•Zhejiang Province•Jiangsu Province

•Greater Shanghai

•Dalian •Tianjin •Shenzhen Special Economic Zone

Currencies (RMB/ HKD/ USD)Only those approved foreign banks are allowed to extend RMB loan facilities to foreign invested enterprises incorporated in the following provinces / cities:

8

Factors To Be Considered (cont’d)

Loan Tenor

Interest Rate• HKD / USD : LIBOR / HIBOR / Prime Rate

Plus Basis• RMB : PBOC’s Base Lending Rate

9

Current PBOC’s Base Lending Rate (For reference only)

Tenor Interest Rate (% p.a.)

<= 6 months 5.04

6 months & <= 1 year 5.31

1 year & <= 3 years 5.49

3 years & <= 5 years 5.58

5 years 5.76

10

Major Assessment Criteria

Management experience and integrity

Financial strength of the borrowers / guarantors

Repayment ability of the borrowers

Marketability of the project, industry business prospects and project viability

Past performance

Security

11

Acceptable Security

Time Deposits

Bank Guarantees or Standby L/Cs

Properties in HK or the PRC(Commercial units, residential units, factory plants or retail properties)

Quoted Shares

Corporate / Personal Guarantees

Machinery and Equipment

12

Acceptable Security (cont’d)

Remarks : Not all the cities in the PRC allow the registration of the charge of properties by banks without branches in the PRC

13

~ The End ~

Thank You